2 4 questions 1 the horizontal axis on the cost volume profit graph is the a dollars 4309367

2.4   Questions

1) The horizontal axis on the cost-volume-profit graph is the ________.

A) dollars of cost

B) sales volume in units

C) dollars of revenue

D) net income

2) The vertical axis on the cost-volume-profit graph is the ________.

A) dollars of cost

B) sales volume in units

C) dollars of revenue

D) dollars of cost and revenue

3) Which of the following is NOT an underlying assumption of cost-volume-profit analysis?

A) We can classify expenses into fixed and variable categories.

B) Sales mix will be constant.

C) Revenues and expenses are linear over the relevant range.

D) There will be changes in efficiency or productivity.

4) What action will decrease a company's break-even point?

A) reducing total fixed costs

B) decreasing contribution margin per unit

C) increasing variable cost per unit

D) decreasing the selling price per unit

5) Assume ZZZ Company has the following information available:

Selling price per unit$100

Variable cost per unit$45

Fixed costs per year$420,000

Expected sales per year (units)20,000

If fixed costs increase $200,000, what is the expected operating income?

A) $280,000

B) $480,000

C) $680,000

D) $1,380,000

6) Assume ZZZ Company has the following information available:

Selling price per unit$100

Variable cost per unit$45

Fixed costs per year$420,000

Expected sales per year(units)20,000

If fixed costs increase $200,000, what is the break-even point in units?

A) 11,273

B) 12,000

C) 13,000

D) none of the above

7) The following information is available for Donald Corporation:

Total fixed costs$333,500

Variable costs per unit$99

Selling price per unit$154

If total fixed costs increased to $394,850, then the break-even volume in dollars would increase by ________.

A) 10.0%

B) 12.3%

C) 18.4%

D) 34.3%

8) Assume the following information for Janice Company:

Selling price per unit$144

Variable costs per unit$80

Total fixed costs$80,000

If fixed costs increased by 10% and management wanted to maintain the original break-even point, then the selling price per unit would have to be increased to ________.

A) $150.40

B) $155.20

C) $158.40

D) $208.00

9) Assume ZZZ Company has the following information available:

Selling price per unit$100

Variable cost per unit$45

Fixed costs per year$420,000

Expected sales per year20,000 units

If variable costs increase to $65 per unit, what is the expected net income for one year?

A) $280,000

B) $700,000

C) $880,000

D) $1,580,000

10) Assume fixed costs are constant and contribution margin per unit is reduced 50 percent.  What will happen to the break-even point in units?

A) It will decrease 50 percent.

B) It will increase 100 percent.

C) It will be the same.

D) It will increase 50 percent.